The Trump administration’s erratic tariff moves continue to drive market behaviour. China is facing the brunt of the blow, with a 145% tariff now placed on all its goods. 

Canada and Mexico are still subject to their original 25% tariffs, while the rest of the US’s trading partners are suffering a 10% levy on their exports to the US. All the other reciprocal tariffs announced by President Trump last Wednesday have been postponed for three months. 

As far as Trump is concerned, this provides a decent period for these favoured nations to come and negotiate. China’s latest response, as of this morning, is to raise its tariffs on US imports to 125%.

Until the rhetoric shifts or action is rolled back, the tariff narrative remains firmly in control, pushing economic data and corporate results firmly into the background.

Denmark has joined China in declaring a response to the belligerent US action. The Scandinavian country has announced a boycott of US goods in response to President Trump’s threat to take control of Greenland. 

In China, exporters are scrambling to adapt, although they are already getting some help from their currency. On Tuesday, the offshore yuan fell to its lowest level against the US dollar since trading began in this pair in 2010. 

The USD/CNH (the US dollar against the offshore yuan) traded above 7.4, although the yuan has strengthened a touch since then.

Amid the upheaval, some are viewing India as a potential winner. This could attract supply chain shifts and fresh investment as companies look to sidestep tariff barriers.

In the US, Trump and key allies have attempted to downplay the impact of the stock market rout, stating publicly that the recent plunge is “no big deal.”

In a surprise to the upside, UK GDP came in at 0.5% month-on-month, handily beating forecasts. European stock indices were sharply higher soon after the open, in line with overnight strength across US stock index futures. 

However, US and European equities had reversed course by mid-morning, giving back initial gains to trade in the red. Once again, volatility is the name of the game as global stock indices experience outsized high-low intra-day swings.

The US dollar continues to slide. This morning, the Dollar Index was sharply lower, slumping below 99.00 to hit its lowest level in three years. Since Trump’s return to power, the dollar has fallen by approximately 7%, which has boosted other major currencies.

The euro has surged, flying past the 1.14 level to trade at three-year highs. Sterling has advanced to 1.30, bolstered by the strong GDP print. Meanwhile, the yen is trading at its best levels in recent weeks, with the USD/JPY falling towards 142.00 as risk aversion keeps safe-haven flows elevated.

Gold continues to shine amid uncertainty. This morning, the metal surged to a new all-time high of $3,227, driven by a combination of safe-haven demand, the weaker dollar, and the relentless stream of competing tariff headlines.

Silver has yet to garner the same level of interest as gold. Despite gold’s breakout to record highs, silver has failed to gain traction and continues to lag. At $31.50 per ounce, it remains well below its own all-time high, just below $50 from April 2011.

Oil prices were little changed overnight. Crude prices have also been extremely volatile over the past ten days. In this morning’s early trade, front-month US light crude was trading on either side of $60. The commodities market continues to follow the equity market’s lead to some extent and remains highly sensitive to the tone of trade negotiations.

Bitcoin rebounded from its overnight lows and is now trading around $81,000, mirroring the slight improvement in broader risk sentiment. The cryptocurrency remains volatile but continues to be led by the broader equity market narrative.

While all eyes remain fixed on tariffs, today’s calendar includes the release of US PPI and consumer sentiment data. Under normal conditions, both have the potential to be move markets. However, in the current climate, they rank well below political and trade developments.

The first quarter earnings season gets underway today, with JPMorgan, Morgan Stanley, and Wells Fargo amongst significant corporations reporting later. Markets will be watching closely to see how the banks are navigating the macro headwinds.

Looking ahead to next week, traders can enjoy a holiday-shortened schedule. Most markets will be closed for the long Easter weekend, starting with Good Friday. Ahead of that, the European Central Bank will announce its latest rate decision and Fed Chair Jerome Powell is due to speak. Both events could provide further clues on the policy path moving forward.

The VIX, Wall Street’s most-watched volatility gauge, eased 3% to settle around 34. At its peak yesterday, the index touched 40, underscoring the severity of recent intraday swings. While the pullback is notable, volatility remains elevated and continues to reflect deep market unease.

Volatility is no longer the exception — it’s the rule. With tariffs dictating market direction and high policy uncertainty, investors are struggling to find stable ground.

UK GDP was a bright spot, and gold’s record-breaking rally speaks volumes about where money is flowing. The dollar’s continued decline and the VIX’s elevated levels only reinforce the message: risk-off remains the dominant mood.

Until trade policy rhetoric eases, markets will likely remain choppy. And with central banks and earnings on the agenda next week, traders will need to stay sharp. For now, traders want to keep an eye on the VIX, as it tells everything going on in the market.